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1250 WordsAug 7, 20125 Pages

The Political Nature of Accounting Standard Setting in Australia
The Political Nature of Accounting Standard Setting in Australia
Introduction
There been conflict in most western countries between private sector bodies and the governmental bodies concerning the process of establishing regulatory arrangements required for setting accounting standards (Hopwood et.al 2005). The recent changes by the Australian Federal Government regarding the structure of setting the accounting standards show a huge shift in power to the government from the professional bodies. Majority of the users of financial reports often try to influence the accounting standard with the aim of protecting their own interests. Standard setters in Australia are having…show more content…

The board was also accountable to the Attorney General’s Department of the Federal government. The key prerequisites for a well functioning and sustainable capital market are the predictability and reliability of the accounting standards as they enable a country to easily recover from a financial crisis. It is therefore important for the standards to be maintained in a transparent way and this has called for political intervention.
Politicians have a huge responsibility in ensuring that an effective system is set for setting accounting standards. This is another major reason as to why setting of accounting standards in Australia has become political (Hopwood et.al 2005). The government has been involved in the process so as to oversee the development of a more transparent, efficient and reliable accounting standards. The government is also responsible for ensuring that the accounting standards are met by the parties using them failure to which it is punishable by law. This therefore is a clear indication of how politics of Australia influence the creation of accounting standards (Pacter et.al 2005).
Impacts of the set accounting standards on wide variety of interest groups
The set accounting standards will have many impacts on variety of interest groups who are expected to benefit from the standards. Transparent accounting is done in the interest of many parties like stakeholders